China is fast catching up with India by offering cost-effective outsourcing services with the latest success being US telecom giant Avaya setting up a large facility in the country, a research firm said.

According to a recent report from Callcenters.net, an Asian research firm, China's call centre industry is set to grow 22 per cent this year.

The size of the industry's labour force, including bank hotline services and IT companies' technical support staff, will hit 158,000 this year, up from 130,000 last year, registering a 22 per cent increase.

In India, the work force is seen rising 16 per cent to 312,500, Sydney-based research firm Callcentres.net said.

Although the size of China's call centre industry is just half that of India's, experts said China's high productivity and cost-effective human resources will attract more multinationals to set up centres in the country.

Avaya has set up an "intelligent communications centre" in Dalian city in north-east China, as part of the company's commitment to the local government in June last year to help turn the booming city into a call centre hub for China and other Northeast Asian markets, the state media reported today.

The centre, located in the Dalian Software Park, will also be Avaya's software and service headquarters for the Asia-Pacific region, senior vice-president of Avaya Global Services Francis Scricco said.

According to a report by US consultancy Frost & Sullivan, Avaya tops China's call centre products and services market with a share of about 20 per cent.

However, things are changing rapidly. For example, multinationals including Dell Inc, Motorola and HP have shifted their call centres to China to take advantage of its cheap labour, China Daily reported.

Domestic firms such as China Mobile and Bank of China have also begun to establish their own call centres with advanced communication systems.

China is keen to enter the outsourcing business and has sent a number of delegations to India to study the working of Indian call centres.

However, poor English language skills seem to be a major problem for the Chinese to compete with Indians.

China, known as the world's factory, is also keen for an image makeover. Chinese leaders have emphasised that the country should encourage service sector as a new area for high growth along with hi-tech manufacturing while cutting down on low-end manufacturing.